MODLR

Margin Waterfall Analysis

Bring clarity to margin performance by connecting financial outcomes with the commercial drivers behind them.

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What Is Margin Waterfall Analysis?

Margin Waterfall Analysis explains why gross margin has changed by breaking the movement down into its main drivers, such as volume, product mix, cost, selling price, markdowns and promotions. MODLR brings these drivers together in one model and shows how each factor contributed to the movement from opening margin to closing margin.

How Do You Analyse Changes in Gross Margin?

A change in gross margin is rarely caused by one thing. Volume, costs, pricing, product mix and promotional activity can all affect the final result. MODLR calculates the impact of each driver and presents the result in a waterfall, making it easier to see what increased margin and what reduced it.

What Are the Main Drivers of Gross Margin?

Common gross margin drivers include sales volume, product mix, first cost, selling price, markdowns, promotions and other commercial terms. MODLR can analyse these drivers across products, categories, vendors, stores and time periods, helping users see which factors had the biggest impact on margin.

How Can You Find Out Why Margin Is Falling?

A falling margin does not always mean costs have increased. It may come from lower selling prices, reduced volume, a change in product mix, heavier discounting or several factors happening at the same time. MODLR separates these effects and links the financial result back to the underlying measures, helping users see where the change came from and what needs further investigation.

Margin Waterfall Analysis with MODLR Software

Design a live connection between MODLR and your ERP Data Collection Data Collection Select the periods, products, categories, or stores to compare Baseline & Comparison Baseline & Comparison Drill into the largest positive and negative movements to understand what changed Variance Investigation Variance Investigation Margin Driver Analysis Margin Driver Analysis Separate the margin movement into volume, mix, cost and price effects Margin Waterfall Margin Waterfall Show how each driver contributes from opening gross margin to closing Decision Support Decision Support Use the findings to support pricing, promotions, supplier discussions and forecasting

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Better Decision Making

MODLR shows what is driving changes in gross margin by separating the impact of volume, mix, cost, pricing and markdowns. This helps teams understand what changed and make commercial decisions with better information.

Margin Improvement

MODLR helps identify which products, categories, suppliers, stores or periods are contributing positively or negatively to margin. Teams can quickly see where there may be opportunities to improve profitability.

Margin Leakage

Margin can be reduced by higher costs, lower selling prices, heavier markdowns or changes in product mix. MODLR highlights these movements so teams can see where margin is being lost and investigate the reasons behind it.

Better Visibility

MODLR brings the main margin drivers together in one view, showing the movement from opening gross margin to closing gross margin. Users can see the overall waterfall and review the supporting metrics behind each movement.

Tracking and Monitoring

MODLR allows teams to compare margin performance across different periods, products, categories, suppliers and stores. This makes it easier to identify trends, spot unusual changes and focus attention on areas that need further investigation.

ERP Integration

Connect to your ERP to automatically pull the most recent actuals

Excel Integration

Plan and Report on MODLR models from within Excel Workbooks.

Audit-reporting

View Audit reporting of who changed what, and when

Variance Analysis

Collect commentary on variances between actuals, budgets and forecasts

Globally Apply Logic

Apply business logic across models globally, not in fits and starts across specific cells in certain spreadsheets

Notification Support

Send emails or SMS alerts when submissions are made to the budget

Driver-based Planning

Quantify the financial impact of your changing operational drivers

Flexible Budgeting

MODLR can adapt to different types of budgeting styles and methods, such as zero-based budgeting

How Margin Waterfall Analysis Works in MODLR

MODLR Margin Waterfall Analysis takes a starting gross margin and explains how it moves to the closing result. It separates the change into the main commercial drivers, such as volume, product mix, first cost, selling price, markdowns and other margin effects. Users can compare different categories, vendors, stores, periods or products and see which factors had the biggest positive or negative impact. The waterfall chart provides the overall movement, while the supporting metrics help users investigate the underlying changes in more detail. This gives finance and commercial teams a clear view of what changed, why it changed, and which areas need attention, making it easier to support pricing, cost and profitability decisions.

Cohort Modelling Screenshot

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Compare Margin Performance Across Suppliers

MODLR lets users compare margin performance between suppliers to understand why profitability differs. The waterfall shows how changes in volume, product mix, first cost, shrink, promotional activity and selling price contribute to the movement from opening gross margin to closing gross margin. The supporting metrics make it easier to see where one supplier is performing better or worse than another and which drivers are behind the difference. Users can then focus on areas such as pricing, cost changes, promotional terms or product mix and use the results to support commercial discussions and better margin decisions.

Cohort Modelling Screenshot

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Gain a real-time view of your cash flow

Made for every customer, MODLR can integrate with your favourite systems, boasting a wide range of pre-built integrations including Oracle, SAP, Sage, NetSuite, Microsoft Dynamics and so much more. MODLR’s data source expertise and flexible integration capabilities ensure that our cash flow forecating solution will provide you with an always up-to-date cash flow forecast.

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